The Space Contract

Trading for a seat on Russia’s Soyuz capsule.

By Kelly L. Rubio

Faced with a critical need to sustain the U.S. presence on the International Space Station (ISS), the National Aeronautics and Space Administration (NASA) negotiated a first-ever, no-exchange-of-funds contract. A seat was swapped on the new U.S. crew vehicle in 2023 for a company’s seat on a Russian spacecraft in 2021. Here’s how.

NASA has supported human operations in low-Earth orbit (LEO) for 21 consecutive years. The overarching goal of the ISS is to maximize utilization for scientific research, technology demonstrations and recently the commercialization of LEO.

The ISS is an orbital outpost for innovation and a research laboratory where human beings live and work, conducting scientific research and new technology demonstrations whose results are not possible to achieve on Earth. It is a blueprint for global cooperation among 15 member nations including Russia, Canada, Japan and 11 European countries.

NASA’s strategy is to meet government needs at low cost, enabling the agency to focus on its Artemis missions to the moon in preparation for Mars missions. The ISS is a testbed for demonstrating new technologies and building a platform for training and thus a proving ground for deep space exploration.

It is critical to maintain a continuous U.S. presence aboard the ISS for safe operations and sustainment of ISS systems, to meet NASA obligations to our nation and international partners, and to advance the agency’s goal of commercializing LEO.

Until 2011, NASA relied heavily on Russian partners to provide transportation services on a Soyuz spacecraft to ferry U.S. astronauts to and from the ISS. However, after the retirement of the Space Shuttle Program in 2011, NASA could no longer rely on Russia’s Soyuz to transport U.S. astronauts to the ISS. The Commercial Crew Program (CCP) was formed to provide launch and transportation capability ser-vices for U.S. and international partner astronauts to the ISS with a safe return to Earth. CCP contracted with both Space X and Boeing for a United States Crew Vehicle (USCV).

However, the USCV was not ready for full use at the time of the 2021 scheduled ISS U.S. crew rotation. NASA had to mitigate the risk of uninterrupted operations on the ISS. Fortunately, Axiom Space, Inc., offered NASA its seat on Russia’s Soyuz spacecraft on the MS-18 launch to the ISS in fiscal year 2021. Axiom had secured the exclusive rights to that seat from the Russians. In exchange, Axiom sought rights to a seat on a future U.S. commercial crew flight in fiscal year 2023 aboard the CCP Space X vehicle.

To fulfill the urgent and critical requirement for uninterrupted operations of the ISS, NASA had to identify the opportunities and risks involved from a contracting and legal perspective in order to find a solution for the ISS Program.

Determining Contract Type

We began with the contracting basics. Would this be a contract based on the Federal Acquisition Regulations (FAR), or other transaction authority, such as a Space Act Agreement?

The acquisition was for the direct benefit of the U.S. government so the Chiles Act would apply:

Chiles Act (31 U.S.C § 6303(1)) “An executive agency shall use a procurement contract as the legal instrument reflecting a relationship between the United States Government and a State, a local government, or other recipient when the principal purpose of the instrument is to acquire (by purchase, lease, or barter) proper-ty or services for the direct benefit or use of the United States Government.”

NASA was exchanging for an Axiom seat, therefore acquiring seat services between the parties. Since there would be no exchange of money the acquisition would not use appropriated funds.

We structured the contract using in-kind consideration rather than appropriated funds. Based on case law, and the fact there would be no appropriated funds, we would not be required to use FAR clauses. FAR requirements apply only to acquisitions by the government of supplies or services with appropriated funds.1

Though there was no exchange of funds on this acquisition (“a non-funded funding obligation”), funding and fiscal obligations still had to be considered.

We faced the risk of ensuring that the benefit received was consistent within the fiscal timing of the benefit provided:

1. The Soyuz Seat benefit received occurred in April 2011

2. The Axiom Seat benefit was to be received in March 2023

The order of the seat exchange turned out to be in the government’s favor. We committed to provide a fiscal 2023 seat in advance of the fiscal 2023 appropriations. Though the authority-to-proceed and first obligation/payment occurred in fiscal 2021, the bulk of the funding would occur in fiscal 2022 and 2023 for the Axiom Seat via the CCP contract.

This risk was mitigated via 51 USC 20142,2 which provides authority to contract for launch vehicle services in excess of available obligations with incremental funding.

FAR and Statutory Requirements for Competition

NASA considered the seat exchange a type of contract and used FAR clauses for the purposes of expediency. Both the existing underlying contracts also were governed by the FAR, the CCP contract (with Space X for commercial crew transportation services) and the Roscosmos contract (with the Russians for previous Soyuz seat transportation services). In addition, other statutory requirements were implemented through the FAR.

We determined the Competition in Contract Act applied, as this would be a no exchange of funds, no-cost contract of civilian agencies.3

In February 2021, NASA chose to do a sole-source justification for the seat exchange and synopsized the requirement via Sam.gov.4 The synopsis publicized that Axiom Space, Inc. obtained the sole, exclusive rights with Roscosmos for a single seat on a Soyuz spacecraft in NASA’s needed timeframe of April/May. Securing the additional Soyuz seat assured critical risk mitigation associated with any interruption in U.S. crew member presence on ISS.

Constructing the Agreement

This no-exchange-of-funds acquisition involved several contract considerations.

Statement of Work (SOW). The SOW was organized in two phases; Phase I was for the Soyuz Services provided by Axiom, and Phase II was for CCP Services provided by NASA.

Phase I covered the requirement that the contractor provide launch, return, and emergency rescue, and associated services for a U.S. astronaut on a Soyuz Spacecraft in fiscal 2021. These were essentially the same services as a nominal Roscosmos seat procurement provided by Axiom.

Phase II covered the requirement that the government provide launch, return, emergency rescue, and associated services for a con-tractor-designated astronaut on a CCP launch in fiscal 2023, considered equivalent services for that of a U.S. astronaut.

Comparative Analysis. We performed a comparative analysis of the exchanged services to determine value. Though we did not price each seat specifically, we knew the price of each seat. The benefit of the Soyuz Seat outweighed the CCP Seat because of the value received for uninterrupted operations of the ISS.

Milestones. We structured correlated milestone dependencies across the two phases of the contract. In consideration for the Phase I ser-vices, the government became obligated to provide Phase II milestones as consideration. For example, a decrement on the Phase I mile-stones would cause an equal and corresponding decrement to the Phase II milestones. Evidence of completion must be provided to the contracting officer and contracting officer’s representative prior to the government’s acceptance of milestone accomplishment. The contracting officer will unilaterally determine the contractor’s successful accomplishment of each milestone event, including compliance with terms and conditions and the SOW.

Therefore, when the contractor met full and complete performance of Phase I milestones, as well as the government doing so on Phase II, the parties agreed that the obligations of both parties will be met, and no additional consideration will be required. This mechanism ensured equivalency between the two phases, thus balancing the risk between each party’s obligations to ensure a mutually beneficial, no-exchange-of-funds arrangement.

Adjustments. In the event of delays due to off-nominal events, such as the contractor’s failure to provide the return vehicle in Phase I, the con-tractor was to purchase the return service via a separate agreement. If the transportation vehicle does not complete return in Phase II, the government will be responsible for providing alternate transportation services, including life support and cargo until the service is provided.

Term and Conditions (T&Cs.) We leveraged the existing T&Cs of the Roscosmos contract and the CCP contract to streamline negotiations. In addition, the T&Cs established precedence contractually and resulted in successful past performance on these contracts.

Cross Waiver of Liability. The contract included a NASA Federal Acquisition Regulation Supplement clause entitled “Cross Wavier of Liability for ISS Activities.” This clause is a reciprocal waiver of claims/liability arising out of Protected Space Operations. The cross waiver encourages participation in the exploration, exploitation, and use of outer space through the ISS. It covered Phase I and Phase II of the contract.

To the Moon, Mars, and Beyond

Use of this no-exchange of funds negotiation technique was one of a kind for the agency. Through it, NASA maintained critical continuous U.S. presence aboard the ISS. NASA Astronaut Mark Vande Hei completed a 355-day stay, the longest spaceflight for an American. Axiom Space signed an agreement with the Mohammad Bin Rashid Space Center announcing it would fly a United Arab Emirates astronaut to the ISS in 2023. In addition, NASA is continuing to enable commercialization of LEO using the ISS.

The requirements for this no-exchange of funds contract were uniquely suitable for negotiating a seat exchange between the parties through the use of a novel technique. This deal involved the negotiation of consideration between NASA and Axiom Space in order to reach final agreement. Both seats involved were of equal importance and benefit in terms of the value of the services rendered to each party.

In the end, the ISS seat exchange contract was successfully executed within 30 days from the time the synopsis was posted on Sam.gov. This contract provided NASA with critical supplemental crew transportation for one U.S. astronaut to the ISS utilizing the flight-proved Russian Soyuz spacecraft using a domestic third-party contract. In exchange, NASA provided the contractor with an opportunity to fly a non-U.S. astronaut member or spaceflight participant aboard a future United States Crew Vehicle to the ISS in the approximate 2023 timeframe.

Use of this novel negotiating feature enabled the ISS Program to ensure the orbital outpost continued human operations to support the commercialization of LEO, scientific advancement as a platform for discoveries, and to enable Artemis missions to the moon and beyond. CM

Kelly Rubio is a Team Lead and Senior Contracting Officer assigned to support the International Space Station and Commercial Low-Earth Orbit (LEO) Development Programs. She leads management and administration of a progressive contract portfolio comprising innovative commercial contracts that support science, research, and utilization of the ISS, as well as stimulating a robust space economy in LEO for continued progress in space. Rubio has been a member of NCMA since 1991. She holds a bachelor’s in Business Administration from Texas Tech University, a Master of Theology from Dallas Theological Seminary, and is a student in the Graduate Certificate Program at the University of Mississippi Law School - Center for Air and Space Law.

ENDNOTES

Fidelity and Casualty Co. of New York, B-281281, Jan. 21, 1999, 99-1 CPD ¶ 16; FAR, 48 C.F.R ¶§§1.104, 2.101, https://www.govinfo.gov/content/pkg/GAOREPORTS-B-281281/html/GAOREPORTS-B-281281.htm.

51 U.S. Code § 20142 - Contracts regarding expendable launch vehicles | U.S. Code | US Law | LII / Legal Information Institutehttps://www.law.cornell.edu/uscode/text/51/20142

41 U.S.C § 253; Gourmet Distributors, B-259083, Mar. 6, 1995, 95-1 CPD ¶ 130.] https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=&cad=rja&uact=8&ved=2ahUKEwjj8Iuk2fn7AhWcKlkFHXO7AkgQFnoECAwQAQ&url=https%3A%2F%2Fwww.gsa.gov%2Fcdnstatic%2FNo_Cost_Contracting_Guidance_-_July_2020.pdf&usg=AOvVaw1mwqAQDzsIbuZTpMhsWjTj.

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International Space Station FACTS

The International Space Station (ISS) has been in continuous orbit around the Earth since 1998.

Fifteen nations supported building and sustaining the ISS: United States of America, Russia, Japan, Canada, and members of the European Space Agency: Belgium, Denmark, France, Germany, Italy, The Netherlands, Norway, Spain, Sweden, Switzerland, and the United Kingdom.

The ISS orbits 220 miles above the Earth and travels 17,500 miles per hour.

LENGTH: 357 feet end-to-end

WEIGHT: nearly one million pounds

WINGSPAN: 240-foot wide solar array

SPACEWALKS: 300+ U.S. and Russian spacewalks